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Progress in Improving Project Management at the Department of Energy: 2003 Assessment Executive Summary The National Research Council’s (NRC’s) Committee for Oversight and Assessment of U.S. Department of Energy Project Management has spent 3 years (2000–2003) reviewing DOE project management policies and observing actual practices at DOE headquarters; at a number of field sites, including Albuquerque Operations, Oakland Operations, Richland Operations, and Oak Ridge Operations; at national laboratories, including Sandia National Laboratories (SNL), Los Alamos National Laboratory (LANL), Stanford Linear Accelerator Center (SLAC), Lawrence Livermore National Laboratory (LLNL), Lawrence Berkeley National Laboratory (LBNL), and Oak Ridge National Laboratory (ORNL); at National Nuclear Security Administration production sites at Oak Ridge and Savannah River; and at environmental management sites at Richland and Savannah River. The principal goal of this effort has been to review and comment on DOE’s recent efforts to improve its project management, including a review of the following: (1) specific changes implemented by DOE to achieve improvement (e.g., in organization, practices, policies, procedures, training); (2) an assessment of the progress made in achieving improvement; and (3) an evaluation of the likelihood that improvement will be permanent. Regarding the first charge, to assess specific changes in organization, management practices, personnel training, and project reviews and reporting, the committee finds that there has been progress in 3 years. At the time of the first of the three assessment reports—the 1999 Phase II report (NRC, 1999)—there was little documentation of DOE management’s expectations regarding project management, if there were any. In 1999 the basic perception reported by DOE
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Progress in Improving Project Management at the Department of Energy: 2003 Assessment personnel was that DOE management did not want to hear bad news. The view of the Committee to Assess the Policies and Practices of the Department of Energy to Design, Manage, and Procure Environmental Restoration, Waste Management, and Other Construction Projects (the Phase II committee) was that DOE management should define its expectations regarding acceptable project management and then document these expectations so that everyone in the organization would know what they were. Less important than the details of the expectations was the fact that DOE management had some expectations and would adhere to them. DOE management’s intentions regarding policies and procedures in general were defined in 2000 by Order O 413.3 (DOE, 2000), but the requirements for implementing program and project management were not issued until 2003 in Manual M 413.3-1 (DOE, 2003). This delay is an indication that DOE management does not have a consistent set of expectations about project management across the agency. Even though the order had been issued and the decision made, considerable opposition existed internally and externally. The philosophy of successful organizations, that once the leadership has made a decision everyone unites to carry it out, has not been implemented at DOE with regard to project management. Nonetheless the committee has observed a number of improvements in the policies that define the process by which DOE plans, selects, approves, acquires, manages, and executes projects. Notable among these process improvements are the following: Issuance of Order O 413.3 and its supporting manual; Formation of the Office of Engineering and Construction Management (OECM) and the Office of Program Analysis and Evaluations (PA&E) in the Office of Management and Budget Evaluation (OMBE); Formation of the project management support offices (PMSOs) in the National Nuclear Security Administration (NNSA), the Office of Environmental Management (EM), and the Office of Science (SC); Increased focus on strategic planning and budgeting, especially by NNSA, through its Future Years’ Nuclear Security Plan (FYNSP), Ten Year Comprehensive Site Plans (TYCSPs), and Integrated Construction Program Plans (ICPPs); The top-to-bottom study and the strategic redirection of EM projects with the specified objectives of earlier completion at lower cost; and Development of the Project Management Career Development Program (PMCDP). Additional notable accomplishments are identified more fully in Chapter 2. Regarding the second item in the charge to the committee, the results from its assessment of progress are mixed. Concerning DOE doing the right projects to support its missions—raised as an essential point in the 1999 NRC report (NRC, 1999)—DOE has made substantial progress in defining mission requirements
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Progress in Improving Project Management at the Department of Energy: 2003 Assessment and long-term plans that forecast and justify the need for new projects and the priorities to be placed on them. The integration of preproject planning with longterm mission statements, if continued, should do much to advance DOE’s project acquisition process. DOE has also expended considerable effort in the development of the PMCDP, an effort that took 3 years to plan, but whether the program will be funded and fully implemented remains uncertain. In spite of the expense and complexity of its projects, DOE invests little in human resource development for project management compared with the efforts of other federal agencies or private corporations in this area. However, although DOE project directors could benefit from more professional education in the roles of the owner’s representative, the problem is as much concerned with quantity as with quality. There are simply too few qualified DOE project directors and project management support staff for the number and complexity of DOE projects. The committee believes that DOE cannot afford to forgo adequate human resources devoted to project management. Regarding the third item in the charge to the committee, to assess the likelihood that improvements will be permanent, the committee can offer little assurance. The progress cited above and documented throughout this final report is largely paper progress. The concern of the committee is not so much that Order O 413.3, Manual M 413.3-1, other documents, and the PMCDP will be rescinded, but rather that they will be circumvented. DOE’s record of continual internal opposition to the order, understaffing of project directors and staff, and underfunding of project management training does not augur well for future success. The view of the committee is that if DOE were serious about continuous improvement of project management, it would put metrics in place to measure progress. However, there are no metrics in place. Even in obvious areas—for example, value engineering, which is required by Order O 413.3 and even by public law—there are no indicators to show any actual improvement in 3 years. The committee sought out best practices in industry for comparison; it observed that a number of large industrial firms, having recognized the need for improved project management, were able to execute complete turnarounds, going from poor to excellent in project management practices in 3 years (NRC, 2002). The common factors that drove improvements in these companies are (1) a commitment from top management, (2) a strong, visible champion for project management and process improvement, and (3) a consistent, disciplined process with an emphasis on front-end planning. The case studies reviewed by the committee demonstrated that excellence in project management in industry is achieved only when the chief executive officer (CEO) or chief operating officer (COO) becomes convinced that it is essential to the success of the corporate mission, puts the resources and prestige of his or her position behind it, appoints a project management champion reporting directly to the CEO or COO, and becomes directly involved in approvals of project plans from the earliest stages. There is no
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Progress in Improving Project Management at the Department of Energy: 2003 Assessment shortcut or secret method, and the process is not glamorous. In these companies, commitment to the corporate position on project management becomes a condition of employment. The committee has not observed this consistent level of commitment throughout DOE. Although DOE has made progress in 3 years, it is far from a complete turnaround, and the battle is far from over. Several factors have contributed to the slow pace of project management improvements. These include the desire of DOE personnel and contractors to be independent of oversight from DOE headquarters, slow implementation of the PMCDP and insufficient support for training, inadequate numbers of professional project directors (DOE project managers), and the absence of a champion for project managers and process improvement who is at a level of authority to be able to ensure adherence to policies and procedures and the availability of the necessary funding and personnel resources. The result of these impediments is inconsistent project performance. These issues require senior management attention to achieve progress in the future. The areas that the committee finds to be in need of additional attention are addressed in findings and recommendations in previous reports (NRC, 2001, 2003) (see Appendix D) and in the recommendations in Chapters 2 and 3. The committee’s concerns include the following: The momentum toward improved project management described above was attributable to the efforts undertaken by a number of influential persons within DOE in various critical management roles. Some of these people have now left DOE. Whether DOE can develop new leaders or whether the remaining leaders are or will become strong and visible champions of project management issues in DOE remains to be seen.1 The committee has previously taken the position that DOE project management should be expanded and professionalized through the training of DOE project directors and supporting staff. Nevertheless, there has been internal opposition to project manager training and professional certification, and funding for the PMCDP, training courses, project management workshops, and other professional development activities has been continually in jeopardy. The amount at issue for project management professionalization is less than 0.001 percent of the amount that DOE spends on projects. The committee has taken the position that DOE project directors and project support staffs are inadequate in numbers to carry out the owner’s 1 Editor’s note: The 2003 assessment is based on information reviewed by the committee through September 2003. In December 2003 the DOE deputy secretary appointed an associate deputy secretary with responsibilities for capital acquisition and project management, a positive step of which readers should be aware as they consider the committee’s comments and recommendations regarding the need for a strong and visible champion of project management issues in DOE.
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Progress in Improving Project Management at the Department of Energy: 2003 Assessment (DOE’s) responsibilities for large and complex projects funded by tax-payer dollars. Nevertheless, the number of project management positions is apparently being cut back. DOE Order O 413.3 and the Energy Systems Acquisition Advisory Board (ESAAB) critical decision process have been implemented, and many project directors in the field who were skeptical 3 years ago now express the view that this decision process has added value to the project delivery system. Despite this change, efforts continue to exempt certain sites and projects from the critical management review process and to raise the threshold level of projects subject to review, even as high as $100 million. The congressionally mandated program of external independent reviews (EIRs) has been instituted, streamlined, and expanded. Many project directors and others comment that they have received useful information from these reviews, but others continue to deny their value. While improvements in the EIR process are possible and desirable, the committee strongly believes it would be a mistake to reduce the EIR program at this time. The advances made in 3 years in DOE project management are fragile, and the legacy DOE culture is strong. Senior management attention and actions are essential if past improvements are to be made permanent and ingrained in the organization. Undersecretary Robert Card has stated that, by the nature of DOE’s business, excellence in the execution of large, complex projects must be a core competency of DOE. The committee wholeheartedly agrees with this view, but does not find that this goal has yet been achieved. The committee could not stress more strongly the need for continued active support from the senior leadership and staff of DOE to make that goal a reality. Committee members talked with many people inside DOE who support improved project management. Indeed, if such individuals did not exist, improvement would be impossible. But many of these people feel that they lack support in headquarters, lack authority to carry out their duties, and lack the senior management advice and support needed to be a strong owner’s representative. They need a champion to back them up, just as project managers in industry need champions in their organizations. The deputy secretary is DOE’s chief operating officer and chief acquisition executive. As such, the deputy secretary has the responsibility for assuring that projects are effectively planned and executed. To perform these functions, the deputy secretary himself or herself either should be the champion for project management improvement—to develop project management into a core competency of the department, to assure that the department maintains an adequate staff of qualified project directors to manage its portfolio of projects, and to assure that the disciplined execution of projects is a priority for managers at all levels—or
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Progress in Improving Project Management at the Department of Energy: 2003 Assessment should appoint someone to perform this role, reporting directly to the deputy secretary (see footnote on page 4). Senior DOE managers have shown visible support for policies and procedures and the ability to step in to resolve deadlocks, but these actions are the equivalent of short-term fire fighting, which may be insufficient to sustain continued process improvement. The escalation of organizational deadlocks and internal disputes up to senior management for resolution is an indication of how the system is not working. The new policies and procedures demonstrate substantial progress in DOE, but the committee is not confident that these changes will be permanent without a strong champion to implement and solidify these procedures across the complex (see footnote on page 4). REFERENCES DOE (U.S. Department of Energy). 2000. Program and Project Management for the Acquisition of Capital Assets (Order O 413.3). Washington, D.C.: Department of Energy. DOE. 2003. Project Management for the Acquisition of Capital Assets (Manual M 413.3-1). Washington, D.C.: Department of Energy. NRC (National Research Council). 1999. Improving Project Management in the Department of Energy. Washington, D.C.: National Academy Press. NRC. 2001. Progress in Improving Project Management at the Department of Energy, 2001 Assessment. Washington, D.C.: National Academy Press. NRC. 2002. Proceedings of Government/Industry Forum: The Owner’s Role in Project Management and Preproject Planning. Washington, D.C.: National Academy Press. NRC. 2003. Progress in Improving Project Management at the Department of Energy, 2002 Assessment. Washington, D.C.: The National Academies Press.
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